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Set up you company.
Pre-Incorporation
In the early stages, teams often work on a project but do not want to incorporate a company yet. Typically, they research the market opportunity and business concept or develop MVP to test the idea. They want to postpone the incorporation to stay focused on the product, save costs, and often they are not sure yet about the business viability of their idea.
In this case, you should sign a #founder pre-incorporation agreement!
📖 Read more and get a free 📝 draft of the founder pre-incorporation agreement!
Incorporation
#Where to incorporate?
It is common for founders in the CEE region to establish their businesses in their home country, the USA or the UK. Some choose a dual structure, with a holding company in the USA or UK and an operating company in their home jurisdiction. However, each approach presents its advantages and obstacles, and choosing the best solution can be difficult.
#How to incorporate?
Nowadays, it's relatively easy to establish a vanilla company and it can even be done online easily. For instance, registering a C-corp in Delaware or an LLC in the UK is quick and affordable. However, setting up a company in Slovenia and Croatia can be more complex. Still, it also offers certain advantages to founders, such as the option of a stock company (d.d.) instead of a limited company (d.o.o.). If you're unsure about the incorporation process or prefer to save time, we can help you determine the most suitable structure and take care of the necessary steps on your behalf.
#Potential challenges
If you're incorporating, you may encounter some challenges. Therefore, we strongly advise seeking professional guidance if any of the following scenarios apply to you.
You wish to incorporate in Slovenia or Croatia and are a foreigner.
You wish to have a dual structure (holding company in the UK/US and operating company somewhere in the CEE).
You wish to incorporate in the UK/US but live in the CEE. However, that structure brings material tax risks.
You or your partners created IP before incorporation and did not sign a founders agreement. You should undoubtedly wrap the IPup in the new company.
There are multiple founders. You should set up founders’ vesting and don't get in a fight if one of you decides to leave the company.
Two founders wish to have 50%:50% shareholdings. So make sure you don't get into a deadlock!
📖 Read more about where to incorporate.
Relocating to the UK or the USA
CEE founders often first incorporate their company in their home jurisdiction. Later, a need to establish a presence in the UK or the USA arises frequently.
If the founders wish to raise capital from the UK or the USA investors, relocating the company’s headquarters is often required (also called a flip). A holding company is typically established in Delaware or the UK, and the operating company remains in the existing jurisdiction. With careful planning, all company and tax law aspects can be considered.
If the founders wish to conduct active trade in the UK or the USA, possibilities also include establishing a trading entity or a branch office in the UK or the USA.
📖 Read more about the challenges of the flip to the USA or the UK.
Establish employee stock option pool (ESOP)
Fairly compensated and motivated employees are the key to success. So set up your ESOP and reward your team. Don't forget the tax peculiarities in Slovenia and Croatia!